Herhold: Cory Booker's dubious investment in social media

In the venture capital world, the adage has it that if there is no conflict, there is no interest. As a statement of how Silicon Valley works, it comes close to the mark. A contradictory tug of interest can help unlock a flash of creative investment.

The problem with the adage is that it doesn't work for politicians. Consider the case of Cory Booker, Stanford grad, Newark, N.J., mayor, likely New Jersey senator and Web entrepreneur.

The New York Times last week described how Booker's Silicon Valley friends, including Google Executive Chairman Eric Schmidt, helped him start an online video-collating company called Waywire (see http://goo.gl/4QBV5a).

It described one meeting with Booker as giving techies "an electrifying sense of being in the presence of an ascending politician they believed understood the potential of the new digital world."

The story also included enough facts to highlight the potential of a lucrative investment for the 44-year-old Booker. In a filing last month, he said his stake was worth between $1 million and $5 million.

Reasons for concern

I happen to think that Waywire will not succeed in a big way. The company recently laid off people, never a good sign. Nonetheless, anyone who follows politics ought to be concerned about Booker's involvement and Silicon Valley's backing -- for two reasons.

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A) He didn't disclose his interest for a year. There are reasons that we have economic disclosure requirements for public officials. It helps the public know where their allegiances lie. Booker treated the requirement as a mere trifle.

With two other social media evangelists, Sarah Ross and Nathan Richardson, Booker founded Waywire in early 2012. He didn't disclose his interest on Newark city forms, a failure that his people say is being remedied now. He filed an amended Senate candidate statement last month.

I doubt this is a simple oversight. If Booker's judgment of his Waywire stake is correct, it dwarfs his disclosed wealth of $730,000. Put simply, he hasn't been honest with voters.

Quid pro quo?

B) Because Booker is a board member and not at the reins of Waywire, the backing he's received from Silicon Valley -- he said he raised $1.75 million in seed money -- smacks of a favor. The Times reported he had a bigger share than his two co-founders.

In the valley, we revere entrepreneurs: They are the source of our wealth.

That's not what Booker is. With Ross and Richardson, he had the germ of an idea -- giving people a way of sorting through billions of Web videos. But he has a day job. He's a mayor and Senate candidate.

That inevitably raises questions about what his backers expect back from Booker. Was it just that he had a good idea? Or do they see a payback from giving a politician a chance to get very rich?

From Silicon Valley's point of view, if there is no conflict, there is no interest. But that doesn't apply in Washington, D.C. An investment in an ascending politician -- however talented he is at Twitter -- carries the possibility of skewing the public's interest.